How can economies gain vitality when banks finance more basements for jobless kids to stay with parents, than SMEs?

Tuesday, October 25, 2016 2:21

% of readers think this story is Fact. Add your two cents.

The Basel Committee’s risk weighted capital requirements for banks set the risk weight for financing residential houses is 35%, while the risk weight for loan to unrated SMEs is 100%.

That clearly means regulators feel it is better for banks to finance the “safer” basements where jobless kids can live with their parents, than to finance the “risky” SMEs that could create jobs for the kids, so they too could afford to become parents.

And to top it up, since they assign a risk weight of 0% to the sovereigns, these statist regulators also believe that bureaucrats know better what to do with bank credit credits than the private sector.